940 sell $3.7m in property for ETFs, combining homes, moving to Sydney & early retirement income

Glen James (0:06)

Today on the show, we are talking the old ancient debate property or shares. What will we do? We're talking about a short distance relationship drama, not really drama, but we'll turn it up for some fun. Moving from Brisbane to Sydney and do we buy a house in Sydney? Do we get a mortgage? Do we do all that stuff? Do we sell Brisbane and retiring early and how we fund our income before we get to age 60 and get access to our superannuation? We're going to talk about that and more. Today, I am joined by John Pigeon and Rach Crune as per my last email from the This Is Property Podcast show. It's also on YouTube if you want to have a look at that. We're going to get straight into it.

Rach, do you want to maybe read that first question?

Rach (0:59)

Absolutely. Anand says, What would you do, property or shares? My husband and I invested into property and they have done well over the years and are now positively geared.

Although they performed well over the last decade, I feel it's unlikely they will grow much over the next decade. I feel the urge to sell them and put the proceeds into ETFs because the compounding effects on the higher return might be greater in the long term. But I'm unsure if I'm being short sighted. The opportunity cost is either holding a $3.7 million property portfolio that has already doubled or put $1.8 million invested into ETFs.

Glen James (1:41)

John, our resident property correspondent, senior property correspondent, what's your take on this?

John Pidgeon (1:51)

Yes, she is.

Glen James (1:52)

She's what?

John Pidgeon (1:53)

Being short sighted.

Glen James (1:54)

Well, my first thing is, I'm not making any type of investment or financial strategy on the words I feel.

John Pidgeon (2:01)

Yeah. I think we've done a number of debates over the journey. Property shares.

I generally win that debate.

Glen James (2:12)

But for the purpose of today's question, I mean, I don't think you've won any when you've been debating the debate master, debate master general.

John Pidgeon (2:22)

I think it comes down to preference cycle. What do you feel comfortable investing in? Just because something's got a greater return, doesn't necessarily mean we go there. I think you've been investing in property and it's doubled in the last 10 years. That's not a bad outcome. Got a portfolio worth 3.7 mil.

What's to say that it's not going to do the same the next 10 years?

What's to say that ETFs are going to outperform property? That's where I think it comes back to, what do you feel comfortable doing? Obviously, 3.7 mil of property, is that costing you anything to hold each year?

Glen James (3:04)

Well, she said that they are positively geared.

Here we go. That's why we give these questions to you before. Just while John's actually reading the question.

John Pidgeon (3:19)

I think that's been, yes, correct. She did say it's possibly geared.

Glen James (3:24)

But the thing, John's jumping in using the feel world, feel word, where I said before we shouldn't base our decisions on feel, but an asterisk next to that is the feeling of I feel it's unlikely to grow.

That's different than I feel uncomfortable with carrying all this debt. So I want to be clear that you can say, I feel that I don't want to carry all this debt for X, Y, Z reasons, whatever they are, but I feel that the market's not going to do anything. Well, that's not based on anything.

John Pidgeon (4:03)

But the debt is relative to your risk profile as well. Like if it is costing nothing to hold, is there a risk with that debt?

Glen James (4:14)

And to be fair, over the last 20 years, Australian property and the ASX 200 have basically done the same.

John Pidgeon (4:25)

Yeah, 7.6 or something like that.

Glen James (4:28)

Yeah, well Australian shares 7.6. Yeah, Australian investment problem. This is just big from LiveWire data, 9%. It's pretty similar. And, you know, US equity is at 10, 10.5%. But I think you're in growth assets and we want to keep it that way. But you're saying they're...

What did you say?

John Pidgeon (4:56)

Well, I'm saying that while we're jumping off a winning horse, it's done what it's done, got you to what I would say is a pretty good position. So we're going on the temptation that we might get a better outcome somewhere else, but we've never trialed that before. So what is our preference?

Are we property people or we shares people? Now, I don't meet too many that are really into both.